Reprieve: MegaUpload's data safe for two more weeks

Kim DotCom (at right) and other MegaUpload employees appear in court following their arrest on January 19.
3News.co.nz/Screenshot by Jonathan Skillings, CNET

MegaUpload users can rest easy about the fate of the digital files they stored at the cyberlocker service.

With MegaUpload disabled by the feds and accused of widespread piracy, and many of its top managers in jail or out on bail, there has been no way for the company to pay Carpathia Hosting and Cogent Communications, the services that host its data. For a while, it looked like those companies would begin deleting user data as early as Thursday.

But managers at both firms have agreed to preserve the material a minimum of two weeks, according to Ira Rothken, MegaUpload's U.S. attorney.

"The hosting companies have been gracious enough to provide additional time so we can work out some kind of arrangement with the government," Rothken said.

Rothken is in negotiations with the government about finding a permanent solution to the user-data issue.

On January 19, New Zealand police raided the Coatesville home of MegaUpload founder Kim DotCom, born Kim Schmitz, and arrested him on piracy, money laundering, and racketeering charges. Those charges were filed in the United States, and the U.S. government is seeking to extradite DotCom and six others.

The U.S. Attorney for the Eastern District of Virginia alleged in a January 5 indictment that MegaUpload was set up to enable millions of people from across the globe to pirate TV shows and films and store them in the company's cyberlockers. The users could then share their videos with each other and MegaUpload's managers raked in millions from the sale of subscriptions and advertising revenue, according to court records.

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The cost to copyright owners was more than $500 million, the government alleged. At their New Zealand bail hearing last week, DotCom and his associates denied any wrongdoing. DotCom was denied bail but two other MegaUpload employees were released on bail.

Rothken said that information crucial to MegaUpload's defense may be part of the files at risk of deletion. He said to preserve evidence as well as protect users' information, a solution must be worked out.

To do that will cost money. The U.S. government seized most of MegaUpload's assets, including cash, art, and automobiles and other property. In the indictment, U.S authorities said they sought $175 million in criminal proceeds.